HARRISBURG, Pennsylvania--Americans say they love U.S.-made goods. They are less enthusiastic, however, about paying a premium for them.
At the AMES Companies Inc factory here, the wheelbarrows coming off the assembly line once every six seconds cost the company more to make in the United States than abroad, but U.S. retailers generally will not charge more for them because consumers would balk, AMES President Mark Traylor said. Nearly all U.S. manufacturers face the same squeeze.
A Reuters/Ipsos poll released on Tuesday found 70 percent of Americans think it is “very important” or “somewhat important” to buy U.S.-made products. Despite that sentiment, 37 percent said they would refuse to pay more for U.S.-made goods versus imports. Twenty six percent said they would only pay up to 5 percent more to buy American, and 21 percent capped the premium at 10 percent.
U.S. President Donald Trump rode into office on promises of bringing back manufacturing jobs and boosting economic growth, and has criticized companies that move production overseas. Trump has also been quick to promote U.S.-made goods, and on Monday released a state-by-state "Made in America Product Showcase" that included AMES wheelbarrows.
Lower-income Americans were the most enthusiastic about buying U.S. goods, the poll showed, despite being the least able to afford paying extra for them. Indeed, the biggest U.S. retailer is well aware of the priority buyers place on price above all else. A spokesman for Wal-Mart Stores Inc said customers are telling them “that where products are made is most important second only to price.”
The good news for U.S. factories is that Americans like the quality of many domestic goods. Thirty-one percent in the poll said American-made cars are the best in the world. German cars were voted best by 23 percent of respondents. And thirty-eight percent said U.S.-made clothes were best.
Still, domestic manufacturers could be in trouble if they fail to capitalize on perceptions about the quality of their products while also keeping a tight lid on costs. In order to compete, companies like AMES have to find ways to offset their disadvantage
“We don’t have to be as cheap as imports,” says Traylor, who estimated he sells his wheelbarrows to U.S. retailers for about 10 percent more than importers.
Factors like cheaper domestic freight and a desire among retailers to carry lower inventories can help make up some of the cost differential.
AMES is also better positioned than overseas suppliers to help retailers be agile. When spring comes early, for example, AMES can respond quickly to ship goods to stores, Traylor said, something importers with longer lead times on orders struggle to do.
Traylor said another secret to success for U.S. manufacturers is investing in technology to cut costs. AMES, a subsidiary of New York-based Griffon Corp, is pouring $50 million into upgrades at several locations. The Harrisburg factory, built in 1921, is dotted with aged machinery that has been fitted with robotic attachments to reduce reliance on human labour.
AMES' annual sales are $514 million. The company said it recently convinced a major retailer, who they did not want to identify, to switch from Mexican-made wheelbarrows to carry their product.
